Stocks Bounce Back

NEW YORK—Technology shares led U.S. stocks higher, reversing much of a day-earlier slide, as investors eyed corporate earnings and steady economic readings in the U.S. and Europe.

U.S. stocks snapped back from a day-earlier tumble, led by technology shares, as investors eyed corporate earnings and steady economic readings in the U.S. and Europe. Alexandra Scaggs reports on Markets Hub. Photo: AP.

The Dow Jones Industrial Average rose 99.22 points, or 0.7%, to 13979.30. The advance erased much of the Dow's 130-point drop on Monday, its biggest daily tumble since Dec. 28.

Technology shares in the S&P 500 led gains across all 10 sector groups in the index. Computer SciencesCSC0.68% jumped after reporting better-than-expected quarterly results. Apple, the world's largest company by market capitalization, posted its biggest increase in three weeks.

"The big macroeconomic issues are abating and now there's a wall of money coming into the equity markets," said Diane Jaffee, who helps oversee about $6 billion as group managing director of U.S. equities at TCW. "It's not all a bed of roses, but we do think the economy is starting to engage."

The U.S. nonmanufacturing sector expanded at a slower rate last month than in December, according to data released by the Institute for Supply Management, though the reading was slightly better than economists expected.

In the Markets

European markets were broadly higher after data showing private-sector activity in the euro zone contracted at the slowest rate in 10 months. But December retail sales in the euro zone declined 0.8% on the month, the largest month-to-month drop since April.

"It boils down to a global recovery story," said Sandy Lincoln, chief market strategist at BMO Global Asset Management, which oversees $120 billion. "There is evidence that traction is beginning to occur. Relative to other asset classes, equities seem to me to be sitting in the first chair."

Asian markets were mostly lower. Japan's Nikkei Stock Average slumped 1.9%, pulling back from the 4½-year high reached Monday, after a disappointing quarterly report and lowered outlook from conglomerate Hitachi weighed on other exporters.

China's Shanghai Composite added 0.2% after the country's central bank made the largest-ever daily liquidity injection to loosen up the money markets ahead of the Lunar New Year holiday.

Front-month March crude-oil futures climbed 0.5% to settle at $96.64 a barrel, while February gold futures slipped 0.2% to settle at $1,672.40 an ounce. The dollar fell against the euro, but rallied against the yen. The 10-year Treasury note fell in price, pushing the yield up to 2.013%.

In the corporate arena, Dell shares gained after the computer maker confirmed it has agreed to be taken private by founder Michael Dell and private-equity firm Silver Lake Management. Shares of Microsoft,MSFT-0.38% which is providing the buyers a $2 billion loan, also ticked up.

Estee LauderEL-0.47% led consumer-staples shares in the S&P 500, after the beauty-products company reported higher quarterly revenue and raised its profit forecast for the year.

ENLARGE

McGraw-Hill tumbled after the Justice Department sued its Standard & Poor's Ratings Services unit late Monday, alleging the firm ignored its own standards in rating mortgage bonds ahead of the financial crisis. U.S. Attorney General Eric Holder said the government could seek more than $5 billion from the firm. S&P on Tuesday called the suit "meritless."

ZyngaZNGA0.40% jumped after Bank of AmericaBAC-1.38%Merrill Lynch analysts raised their rating on the social-games provider to "buy" from "underperform," citing the performance of the company's FarmVille 2 game and potentially better results in mobile devices.

Cardinal HealthCAH1.97% firmed after the U.S.'s second-largest drug distributor by sales raised the low end of its earnings forecast.

Yum BrandsYUM-0.30% dropped after the owner of KFC and other fast-food chains said it no longer expects earnings growth in 2013 given continued negative same-store sales.

The U.S.-listed shares of the U.K.'s Virgin Media surged after the company confirmed that it was in talks with international cable operator Liberty GlobalLBTYA0.10% about a possible business combination.

NYSE Euronext rose after reporting fourth-quarter earnings and revenue that were below year-earlier levels but exceeded analyst estimates. The exchange operator said it anticipates operating expenses and its debt-to-earnings ratio to decline.

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